The Best Investment Books Ever Written
The best investment books don't contain magic formulas for stock market wealth. If they did, we'd all be rich. Rather, great books on investing teach us how to think, how to analyze, and how to approach a discipline that only a few will come close to mastering. If you're looking for instant riches, look elsewhere. Investment success is achieved only through long term application of sound investing principles. The books listed below are my choices for the best investment books that I have encountered. Fortunately, most are still in print, but you can always look on ebay or abebooks for those that may have gone out of print.
- A Random Walk Down Wall Street by Burton G. Malkiel - A great place to start on your quest for investment knowledge. Malkiel makes the classic case for the efficient market hypothosis. This is clearly not a message most would-be investment millionaires want to listen to, but it's essential to know the default academic view of markets and investing. Must reading for any investor.
- The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel by Benjamin Graham - Benjamin Graham was Warren Buffett's mentor and idol (and briefly his boss). Graham made the case for dispassionate numbers-oriented investing. He suggested that the stock market was occasionally irrational and advocated buying when Mr. Market was offering a discount. Central to his investment philosophy was the concept of "margin of safety" as a protection against downside risk.
- The Warren Buffett Way: Investment Strategies of the World's Greatest Investor by Robert G. Hagstrom - Of all the books written about Buffett's investment philosophy, this remains the best. Hagstrom offers a solid analysis of Buffett's stock investments and the underlying principles behind the Sage of Omaha's investment strategies.
- One Up On Wall Street : How To Use What You Already Know To Make Money In The Market by Peter Lynch - Younger readers may not know who Peter Lynch is, but his performance as the manager of the Fidelity Magellen mutual fund in the 1980's is a Wall Street legend. The focus of this book is on how to use your own specialized knowledge to gain an edge in the market. In contrast to the dominant "value investing" meme, Lynch is a growth investor looking for fast growing companies that may become huge investment successes. In an age when markets are dominated by quantitative analysis, this book remains more timely than ever.
- The Money Masters by John Train - This book is a terrific analysis of the investment careers and philosophies of several of the 20th century's most successful investors. T. Rowe Price, John Templeton and Warren Buffett, Paul Cabot, Philip Fisher, Benjamin Graham, Stanley Kroll, Larry Tisch, and Robert Wilson are each the focus of individual chapters. Train writes lucidly and well and has a knack for getting the the root of investment success.
- Securities Analysis by Graham and Dodd - Considered by many to be the classic book on securities analysis, Graham and Dodd have influenced more investment careers than any other writers. Clearly much of this book (written in 1934) is dated, yet it remains an important guide on how to methodically dissect potential stock and bond investments.
- Fooled by Randomness by Nassim Nicholas Taleb - Taleb's other book, The Black Swan, has become iconic as a guide to the root causes of the recent financial crisis; but this, his first book, is the better argued and more important of the two. Taleb makes plain how humans use too-small data sets to fool themselves into believing what they want to believe. In our desire to bring order from chaos, we try to shape the inherent randomness of life into coherent models. Taleb believes this is a dangerous waste of time
- Common Stocks and Uncommon Profits by Philip Fisher - Fisher was a great believer in the "scuttlebutt" theory of investment. Corporate success is rooted in institutional character that can be discovered by reference to the opinion of important men. Limiting investments to companies that have integrity and the good opinion of customers and suppliers will lead to above average investment results.
- Triumph of the Optimists: 101 Years of Global Investment Returns by Elroy Dimson, Paul Marsh, Mike Staunton - Triumph of the Optimists may be the most important coffee table book ever written. It's full of charts and data covering 101 years of investment history in 16 countries. The result is a compelling case for long term stock market investment as the basis for wealth accumulation.
- Reminiscences of a Stock Operator by Edwin Lefèvre - This book has achieved a kind of legendary status as a guide to the psychological side of investment success. Lefèvre, the psydonym of the speculator Jesse Livermore, plied his trade during the bucket shop era of the 1920's and gained and lost several fortunes. This book is an account of how his feel for the mood of the crowd and knowledge of human psychology were the key to his fortunes.
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